Freddie Mac and Fannie Mae in the News — What Brokers Need to Know Now

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Mortgage Market Giants Make Headlines Again

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Last week, Fannie Mae and Freddie Mac returned to the spotlight with major developments that could shape the future of the U.S. mortgage industry. As Orion Lending brokers consistently explain to clients, these government-sponsored enterprises (GSEs) don’t originate loans — they buy mortgages from lenders, package them into mortgage-backed securities, and sell them to investors. This process ensures liquidity in the housing finance system and helps keep mortgage rates lower.

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White House Considers Selling Fannie & Freddie Stock

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According to a recent Wall Street Journal report, the Trump Administration is preparing a plan to sell stock in Fannie Mae and Freddie Mac, potentially launching before year-end. This move could mark a significant step toward privatizing the GSEs, with serious implications for mortgage professionals, investors, and borrowers alike.

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The proposed plan includes the sale of 5–15% of Fannie and Freddie’s shares, valuing the companies at a combined $500 billion or more. Such a transaction could generate up to $30 billion for the federal government, much of which would benefit current shareholders — including large institutional investors.

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High-Level Talks with Wall Street Leaders

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In recent weeks, key figures from Morgan Stanley, JPMorgan Chase, Goldman Sachs, Citigroup, Wells Fargo, and Bank of America have reportedly met with President Trump and other senior administration officials to discuss the roadmap. However, details remain unclear, including whether the companies will remain under government conservatorship, or emerge as fully private entities.

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A Flashback to Conservatorship and the 2008 Crisis

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Veteran brokers will remember that Fannie Mae and Freddie Mac were placed under conservatorship in 2008 during the financial crisis, with the creation of the Federal Housing Finance Agency (FHFA) to oversee their operations. Though their stock is publicly traded and has seen a significant increase — more than tripling since late 2024 — the companies are still technically under government control.

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Mortgage Market Impact: Why Brokers Should Pay Attention

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Here’s where the rubber meets the road for brokers: privatizing Fannie and Freddie — or even signaling weaker government support — could result in higher mortgage rates.

Why?

Currently, investors buy mortgage bonds partly because of the implied government guarantee and the top-tier credit ratings that come with it. If that backing disappears or weakens, Fannie and Freddie will likely need to pay higher yields to attract investors. Those added costs would inevitably be passed on to borrowers in the form of higher interest rates.

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Industry Insight: Without a government guarantee, rates could increase by 1% to 1.5%, similar to the spread currently seen in non-QM (Non-Qualified Mortgage) products. Even a partial guarantee could nudge rates upward by around 0.25%.

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With the residential mortgage-backed securities (RMBS) market exceeding $10 trillion, even small changes in investor confidence can ripple across the housing market.

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Why Reform Has Been Delayed for Years

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The idea of removing the GSEs from conservatorship isn’t new. Despite bipartisan discussions across multiple administrations, no clear solution has emerged. The primary concern? Disruptions to mortgage affordability and market stability.

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What Brokers Should Do Now

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• Stay Informed: Keep up with policy updates and proposed changes to GSE structures.
• Educate Clients: Share how shifts in Fannie and Freddie’s roles may influence long-term mortgage rates.
• Prepare for Rate Volatility: Encourage clients to lock in favorable rates now, especially if privatization becomes a more likely reality.
• Position Non-QM Solutions: Be ready with alternative loan products like Non-QM to meet borrower needs if conventional loan pricing becomes less competitive.

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Conclusion: The Future of Fannie and Freddie Impacts Us All

The potential privatization of Fannie Mae and Freddie Mac is more than a political or financial headline — it’s a real factor that could shape the mortgage market for years to come. For brokers, this underscores the importance of staying proactive, understanding capital market mechanics, and preparing clients for potential shifts in mortgage pricing and loan availability.

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Orion Lending remains committed to providing you with industry-leading resources, timely updates, and innovative loan solutions to help you navigate this evolving landscape with confidence.

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